The Turkish Commercial Code No. 6102 (“TCC”) regulates the notification requirements of the policyholder to the insurer. Pursuant to the TCC, there is an obligation on the policyholder to provide all material information to the insurer that is known, or ought to have been known, by the policyholder that would affect the conclusion of the insurance contract or may require the contract to be concluded on different terms and conditions. If the insurer provides a written list of questions to the policyholder, the questions and the policyholder’s responses will be considered material information and the policyholder will not be obliged to provide additional information to the insurer. If upon receipt of the policyholder’s responses the insurer requires additional information, the insurer may ask the policyholder additional questions in writing. Furthermore, the policyholder is not required to provide information on any issue that is already known to the insurer. However, in all cases there is an overarching obligation on the policyholder not to withhold material information in bad faith, regardless of whether or not the insurer provides a specific list of questions.
The TCC states that, actions of the insured (under third-party insurances) or the beneficiary (under life insurances), shall be taken into account in terms of the performance of this obligation, provided that they are informed about the insurance. Therefore, although not expressly stated under the TCC, it is accepted in practice that the insured and the beneficiary will be under the same obligations as the policyholder under such circumstances.
The remedies available to the insurer in instances of misrepresentation and/or the non-disclosure of material information depend on when the insurer becomes aware of the misrepresentation and/or non-disclosure.
If the insurer becomes aware of the misrepresentation and/or non-disclosure before the occurrence of an insured event, the insurer may either:
- rescind the insurance contract within fifteen days of becoming aware of the misrepresentation and/or non-disclosure; or
- request from the policyholder or the insured, as the case may be, the amount of the additional insurance premium that would have been paid by the policyholder had the misrepresentation and/or non-disclosure not occurred.
In cases where the insurer becomes aware of the misrepresentation and/or non-disclosure after the occurrence of an insured event under the insurance contract, and the misrepresentation and/or non-disclosure has an effect on the quantum of the policyholder’s/insured’s/beneficiary’s claim or on the occurrence of the insured event itself, the insurer will either:
- be entitled to reduce the insurance proceeds by the difference between the insurance premium paid by the policyholder and the insurance premium that would have been paid by the policyholder had the misrepresentation and/or non-disclosure not taken place; or
- if there is evidence of bad faith on the part of the insured and causality between the misrepresentation and/or non-disclosure and the occurrence of the insured event, the insurer will be entitled to rescind the insurance contract and will consequently be discharged from its obligation to pay the insurance proceeds.
Please note that in the case of life insurance contracts, the remedies available to the insurer in instances of misrepresentation and/or non-disclosure are more limited. For example, an insurer is only able to rescind a life insurance contract within the first five years of the insured term; thereafter the insurer will only be entitled to claim for the insurance premium difference.
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